In attached video, you'll see that the reach of the player is greatly reduced when any mob entity is placed above the blocks a Player is attempting to break or place on.

Steps to Reproduce:

1. Build 8 blocks up, dirt is easy to break by hand
2. Place any mob entity on the top of the stack (armor stand easiest as it doesn't move nor attack)
3. Go into survival mode and break the 2 blocks so that you can stand under the stack of 8 blocks
4. While under the stack, look straight up
5. Break blocks until it prevents you from doing so
6. Open chat and /kill the mob entity you placed on the top of the stack
7. While still looking straight up, continue breaking blocks

Observed Results:
You will be able to break blocks that you previously were not able to break with the mob entity on top of the stack of blocks

Expected Results:
You should be able to have the same reach throughout the entire experiment

Notes:

This bug post was previously about crouching and non-full blocks, but this has been found to be what has been causing the bug, as there was an armor stand at the top of the stack of blocks I discovered this bug on.

Attachment:

Demonstrates a stack of dirt blocks with an entity on top versus one without an entity. You can hear from the sounds that I was attempting to hit and place blocks on the stack with an entity on top of it, but was being prevented by the entity on top. Meanwhile, the stack without the entity on top was able to be freely placed and broken to normal reach limits.